VENDOR MANAGEMENT

The basic concept of Vendor Management is to “Manage your vendors

or they’ll end up managing you!”

Summary -- A bold change of initiatives and an efficient use of

database are the keys to successful Vendor Management. This offers a
complete view of vendor activity and performance that is crucial for an
efficient and cost-effective project. It helps in delivering a flexible,
cohesive platform for enabling, engaging, and evaluating your
suppliers. Though there are no permanent solution/fixes for enhancing
performance, one can take specific steps to maximize effectiveness.

Often, we draw upon our experience to handle basic problems in

vendor management. This white paper lists these basic problems
which an organization might face if it outsources work to vendors.
Once this paper is through, you can prepare a comprehensive checklist
that will help you in getting the best out of your vendors.

Vendor selection

The important thing is to figure out which vendors must be ‘managed,’

and which ones do not need ‘management.’ This might sound like an
absurdity, but there is some truth to it. For instance, companies might
monitor purveyors of office supplies for best prices and basic service
requirements, but a deeper relationship is essential for strategic
vendors who will deliver Elearning modules or content, on time and at
the right cost.

A crucial step is to choose the right vendor. Begin with shortlisting

vendors who have worked on similar projects and have a good track
record.

Finding talented and efficient vendors at a reasonable cost can be

challenging.

The implementation process begins long before the vendor is selected.

The specifications should include the optimum rollout approach, with
key dates and implementation success criteria. The entire process,
from specification development to implementation, must be handled
along formal project management lines. From the outset, there must
be a Project Board that will undertake to do vendor evaluation. This
Project Board should also have overall responsibility for the
implementation of the project, otherwise all the knowledge gained—
and decisions made—during the vendor selection could well be lost.
The Project Board should consist of perhaps no more than five
managers who have the most to gain and, therefore, will take a keen
interest in the project. Almost certainly, there should be representation
from Personnel/Human Resources.

Once you have found several technology-based vendors that interest

you, gather as much basic information about them as you can. Visit
their Web site, interact with them and review their work.

Once an initial short list of perhaps four to six vendors has been
developed, the first task is to compare the different approaches from
these vendors and finalizing on the best possible option. A mandatory
criteria is the budget and the confidence the vendor has in meeting
implementation dates. What you should be looking for is the way the
vendor communicates an understanding of your requirements and how
these requirements will be met, as well as the way in which the vendor
team members deal with questions from the Board. One of the
selection criteria can be—do you feel comfortable with the vendor
team?

Some other key considerations are:

· Experience: How many projects have they completed that are similar
in size, scope, or content to yours?
· Strength of Company: Do they have the financial resources and staff
size to complete your project and maintain it in the future?
· Quality of work: Have they received professional awards, published
articles in trade magazines, or otherwise been recognized for their
work?
· Resources: Does the vendor have full-time, on-site staff for all critical
project tasks?

According to Sue Welch, CEO of Trade Stone Software, a developer of

global sourcing and supplies systems in Gloucester, MA, “Wherever
possible, provide value to your vendors when you are asking them to
adapt to your business needs and requirements,” she advises. “For
instance, if you want electronic invoicing, offer incentives such as
prompt payment or instantaneous audit that can auto-correct invoice
discrepancies before submission.”

· Determine how well a vendor will solve problems on your project. This
is never easy. After all, any vendor will tell you it has excellent
problem-solving skills. Here are a few questions to ask prospective
vendors that will help to let you know how well they can really deal
with problems:

1. What are the problems that you have come across while working on
similar projects in the past?
2. How did you deal with those problems?
3. Did you manage to finish your project on time?
4. Were you able to complete your project within the sanctioned
budget?

· Value addition -- Look for vendors who think beyond their

assignments and can add more value to their projects. What you don't
want is someone doing what they're told to do, just because it's a part
of the Media standards.

· Develop a Triumph Relationship with the Vendor

We don’t want to wield a big stick to beat up vendors, but we want to

create relationships that allow both parties to work successfully in the
long term. Creating a triumph relationship with the vendor is
mandatory for good results.

Here are some tips for creating a positive relationship with vendors:

Tip #1: Proposal Process

· The Request for a Proposal is detailed in its specifications.
· Along with prices, proposals specify the quantity and quality of the
media, interactivity, and content.
· A winning solution is judged on the quality of the firm's work, strength
of the company, dedication to customer service, price, and quality of
the proposal, itself.

Tip #2: Only one Point of Contact – There should be only one point of
contact who coordinates between you and the vendor – the Project
Manager/Project Lead. Though each project has assigned team
members, miscommunication becomes likely when several individuals
are talking with different levels of each organization. For example, if
the client is experiencing a technical glitch or bug, it might make sense
for the client's technical support personnel to speak directly with the
vendor's most advanced programmer. However, the project manager
from the client and vendor should participate in this meeting or phone
call to make sure that prior commitments or expectations are
understood, action items agreed upon, and timetables are set.
This will help in filtering right and clear information.

Tip #3: Regular evaluation through progress meetings: Following this

simple checklist will help improve teamwork on a project. The vendor
should be reviewed at regular intervals so that all the problems are
solved at the initial stage. One can meet once or twice a week on a
project at the given time with the vendor and discuss the project
status. It can also include regular phone calls with the vendor and
client. During these meetings, one can review the projects and make
changes if required. Also discuss the next step and an update on the
schedule. In-between, one can also make frequent calls to the vendor
to re-check if the vendor needs any information and that everything is
on schedule. This keeps the project moving smoothly.

Tip #4: Updated Project Report: Regular updating of the project

schedule should be maintained. The report can be a simple chart that
is frequently updated so that one is aware of the missed deadlines or
early deadlines. This will allow you to plan at an early stage so as to
overcome delays. As you act as a mediator between the client and the
vendor, you should add a buffer before quoting a timeline to the client.

Tip #5: Try and make all revisions on the prototype: The prototype is a
working module that includes the major sections of each step in your
project. We should try and work with this prototype, get the initial
approvals and refine the look, the feel, and the usability of the
interface. Examine, test, change, and ultimately approve the colors,
fonts, menu structure, location of the navigation buttons, and interface
metaphors. The interface should be approved and locked-in before a
significant part of the script is completed so the writers will have an
accurate sense of screen space while allocating text and specifying
graphics.

Tip #6: Make all content revisions in the script: After the prototype, the
next major step from the production team is the script or storyboard. It
is very important to review the words, pictures, and sounds that will
appear in the final program. Many clients give only a cursory glance at
this document and then end up requesting substantial changes after
the content has been implemented. It is very time-consuming and
expensive to change content after it is implemented in the program.
Unless there are obvious typos or mistakes in grammar, revisions to
content after it is implemented should be avoided.

· Improved Vendor Performance -- Transparency of the project between

you and the vendor is very crucial. It also helps you discover how to
create and leverage opportunities to improve vendor performance.

· Get what you pay for – It is very important that the vendor delivers
the product/quality that was agreed on and is your requirement. The
above tip helps you achieve it.

· Just to remind you -- never accept vendors at face value. Analyze and
test them at your level to build a positive business relationship.
• Also recognize that while you expect value for the money you spend
with a vendor, the vendor is also in the business to make a profit and
has to cover overhead expenses that may not seem obvious to you or
your staff. Always let your vendor know you are interested in a
mutually profitable relationship.
• Use your vendor representatives as a resource for information and
advice. However, be respectful of the time the vendor’s representative
spends with you. Remember that time is money for both of you.

· Listen to your vendors -- Companies may be wasting their energy if

they put specific segments of their business out to bid. Instead,
Verticalnet’s Habig suggested that better strategic results are
achievable when companies let their vendors bid on the parts of their
business that they want the most.

Highlights of Vendor Management:

· Helps streamline, simplify and standardize your workforce processes

· Allows you to increase vendor quality, and helps you make better-
informed workforce decisions
· Enhances efficiency and helps you manage risk
· Reduces costs by helping you lower vendor rates, eliminate maverick
spending and manage headcount to budget
· Lets you focus on strategic human resource functions without the
headache of managing E-learning modules/application
Vendor Management enables you to maintain a preferred list of clients,
vendors, and suppliers to ensure successful relationships.
A well-orchestrated strategy of cost management, working-capital
management, and technology-driven productivity will make your
business run smoothly.